Security Token News
Overstock Seeks to Tokenize Series 1 Shares – tZERO
The online retail giant, Overstock, issued a letter to stockholders this week requesting the ability to tokenize all Series 1 shares utilizing the company’s tZERO blockchain platform. tZERO is a subsidiary of Overstock that was developed specifically to handle blockchain services. Swapping to the blockchain system gives investors more flexibility. Also, it allows Overstock to showcase its new platform’s capabilities.
Enhanced Trading Experience
Citing the letter, Overstock officials seek to provide investors with more liquidity in the market. As the security token sector continues expanding, there is a growing call for more liquidity in the space. Security token exchanges provide regulated digital asset investors with an answer to the liquidity issue. These platforms allow investors to trade blockchain assets while remaining compliant. Compliance includes following KYC/AML laws. Also, security token exchanges register with government officials. In these ways, they differ from traditional crypto exchanges.
Speaking on the tZERO project, Overstock’s CEO Patrick Byrne praised the progress attained so far. The platform officially launched in January. Byrne described the tZERO blockchain platform as of the “most significant and cutting edge in the world.” He also took a second to relate his excitement surrounding the first round of products becoming publicly available.
Overstock CEO Patrick Byrne via Twitter
tZERO Exchange
tZERO is a leading Fintech firm that offers enterprise-level blockchain solutions for traditional markets. The platform enables streamlined security token trading with full compliance. Today, the company operates one of only a handful of licensed security token exchanges in the US.
As you could imagine, tZERO is considered a major player in the security token space. Notably, the platform has been on the crypto radar ever since the firm secured $134 million in funding during a December 2017 ICO. Since then, the company hosted numerous crowdfunding rounds aimed at select investors.
tZERO incorporates securities regulations directly into its token protocol. This strategy ensures that all security tokens remain compliant throughout their life cycle. Interestingly, the firm announced this month that moving forward, all tokens on the platform will utilize Securitizes Digital Securities (DS) protocol.
A Demonstration with Overstock
It appears that the developers behind the tZERO platform are ready to start trading. Also, it’s praiseworthy that the development team decided that tokenizing Overstock shares first was the best move. This strategy boosts confidence in the platform. Also, it enables tZERO to iron out any issues in-house.
Not All Roses
The tZERO platform has not been without its setbacks. In Q4 tZERO showed $12.6 million in pre-tax losses. Consequently, the program saw cutbacks in March that were significant. Despite the losses, tZERO is now active and ready for action.
tZERO Time
As the world of the corporate coins and security tokens is just heating up, tZERO picked an ideal time to enter the market. This platform should capture a significant amount of trading volume amongst these corporate coins as the market expands. For now, investors eagerly await to see the results of the last two years of development.
This week, Overstock.com announced revisions to its Series A-1 Preferred Stock (OSTKO). The firm wants to drop trading restrictions and allow investors to trade OSTKO shares immediately. This pioneering strategy provides liquidity to investors in a manner that wasn’t possible before the advent of blockchain tech.
Eliminate Rule 144 – OSTKO
All traditional shares require a six-month lockup period to be compliant with SEC Rule 144. During this period a series of processes occur to finalize the purchase. Overstock automated these procedures via smart contracts. Now the company seeks SEC approval to eliminate the need to adhere to Rule 144 in this instance.
The Original OSTKO Launch Date
The original record date for the OSTKO launch was September 23, but company executives postponed the date to push their new strategy. Now, Overstock plans to announce the new record date sometime in the next two months.
OSTKO
The new tokenized shares will be slightly different than their traditional counterparts. For example, Overstock’s board approved a conversion rate of one digital series A-1 preferred stock to ten shares in common stocks. Interestingly, the company chose to make the new stock only available via the Dinosaur Financial Group brokerage platform.
The Dinosaur Financial Group is also a partner with tZERO, Overstock’s blockchain subsidiary. In both instances, the Dinosaur Financial Group functions as the broker-dealer. Basically, the firm provides brokerage accounts for investors seeking to trade these digital assets.
Dinosaur Finacial Group via Homepage – OSTKO
Discussing the partnership at that time, Dinosaur’s Managing Director of Equity, Elliot Grossman described his company’s pride in being a pioneer in the industry. He said that the technology has the potential to create “disruptive changes for issuance, trading, and settlement in capital markets.” Today, Grossman is the CEO of tZERO.
Interests Rising
Speaking on the OSTKO shares, Overstock’s Interim CEO, Jonathon Johnson discussed the interest seen from broker-dealers, regulators, and shareholders. He called the technology groundbreaking before touting integrated compliance and investor protections.
Most importantly, Johnson explained that blockchain technology improves the overall investor experience. He also described the tech as having an “enormous potential to transform society for the better.”
Slow Short Selling
It was Overstock’s ex-CEO, Patrick Byrne who first thought up the idea of tokenizing shares. Ironically, the strategy originated as a way to stop ramped short selling of their stock. Byrne claims a well-organized group of fraudsters targeted Overstock for the last year via these short sales attacks.
The short sellers seemed to only work with dollars so the plan to tokenize worked great. That was until early this week when Morgan Stanly and JPMorgan started accepting fiat payments for the tokenized stock. The news caused an investor frenzy that sent Overstock shares down 40% from a recent 52-week high.
Overstock is Full Blockchain
It’s interesting to see how Overstock uses its blockchain know-how to navigate the market-scape. In this case, the use of blockchain to stop short sales attacks resulted in the development of a better investor experience. You can expect to see more from these innovative developers in the coming weeks as OSTKO goes live.
This week has seen some dramatic events take place in the blockchain real estate sector. Notably, AssetBlock announced the tokenization of $60 million in real estate funds. The news demonstrates the further expansion of blockchain technology into the traditional real estate market, and AssetBlock’s desire to become a major player in the sector.
News first broke of the tokenization on September 17 via a BusinessWire press release. In the post, AssetBlock sheds some light on the strategies in place and how the company plans to disrupt the traditional markets.
AssetBlock Utilizes Algorand Blockchain
Uniquely, AssetBlock chose to tokenize the properties on the Proof-of-Stake blockchain – Algorand. The Algorand blockchain brings some interesting benefits to the table including compliance, global reach, and a strong team of experienced experts.
As such, the Algorand blockchain is built to be sustainable and governed by open operating standards. Another important point worth mentioning is that Algorand blocks finalize in seconds. In essence, this strategy makes it possible for investor participation globally and instantly.
Proof-of-Stake
As a Proof-of-Stake blockchain, the energy consumption is far less than a Proof-of-Work (PoW) blockchain such as Bitcoin. Algorand uses a proprietary version of PoS dubbed Pure Proof of Stake (PPoS). This protocol provides full participation while leaving users protected at all times. The system is able to achieve consensus without the need for a central authority making truly decentralized.
AssetBlock via Homepage
Lodging Capital Partners LCP
To make this advantageous maneuver, AssetBlock enlisted Lodging Capital Partners (LCP). LCP currently holds over $1.5 billion in international real estate. For their part, LCP provided the properties to be tokenized.
In this particular instance, AssetBlock chose to tokenize $60 million in luxury hotel properties. According to company executives, these properties are only available to blockchain investors.
AssetBlock – More Opportunities
Speaking on the decision, AssetBlock CEO, Mike Lidell touched on the importance of merging traditional and non-traditional investors in an efficient manner. He explained that this is the best way to create more opportunities for everyone in the market.
Additionally, Steve Kisielica, the Principal CIO of LCP described how the maneuver creates a new investment pool in the market. He also spoke on the responsibility companies have in terms of embracing new technology that simplifies the market.
Coming Soon
AssetBlock officials are serious about getting these tokens out to investors. The company officially earmarked the token launch for mid-October.
Real Estate is Growing Digital
The company’s decision mirrors that of some of the biggest players in the game in some aspects. Just this week, Securities reported on Harbor tokenizing $100 million in real estate funds for much of the same reason.
AssetBlock
You have to give it to AssetBlock for it’s out of the box thinking. Utilizing a Proof-of-Stake blockchain is a great way to avoid future issues related to energy consumption. You can expect this deal to boost the notoriety of all the firms involved, as well as the possibilities of using PoS blockchains for tokenized real estate.
Acquisition
Today it was announced that PayRue has acquired a cryptocurrency exchange, developed by TokenMarket.
With PayRue already holding the appropriate licensing in Estonia to launch an exchange, it is expected that the service will go live sooner than later.
This move goes beyond simply taking control of a cryptocurrency exchange, however. The acquisition is part of a larger partnership which will see the pair of companies work to ensure future integration of services throughout their platforms. The companies state that this integration will benefit their client base, currently numbering over 200,000 and growing.
Increased Focus
This acquisition caught our attention, specifically, due to the reasoning behind it. On the part of TokenMarket, this move was undertaken with the intent to focus their efforts more completely on the advancement of the digital securities sector.
Over the past few months, TokenMarket, has made it clear that this is where they believe the future lies, and are hitching themselves to the wagon. Whether undergoing their own STO, or working to develop services and obtain appropriate licensures, they are quickly setting themselves up to be a leader in the space.
Commentary
Upon announcing the acquisition and re-focusing efforts discussed here today, representatives from each, PayRue and TokenMarket, took the time to comment. The following is what the CEO of each company had to say on the matter.
Mikael Olofsson, CEO of PayRue, stated,
“Working with TokenMarket on a cryptocurrency trading platform is an exciting development for PayRue. Some may see the exchange market as crowded, but our view is that regulated decentralised exchanges are the next evolution and very few companies are prepared for this. We believe that our users will benefit from the security and transparency that centralised exchanges are currently failing to deliver, as showcased with the continuous hacks and fake trading volume”
Ransu Salovaara, CEO at TokenMarket, stated,
“We are excited to work with PayRue as we believe there will be a monumental shift to regulated wallets and exchanges. This partnership allows us to put all our focus on token issuance and the tokenised securities market, which we expect will be a billion dollar business in the coming years.”
Speaking with Mikko
We recently had the pleasure of completing an exclusive interview with the Chief Technology Officer of TokenMarket – Mikko Ohtamaa. In this interview, Mikko, discusses, not only his own foray into blockchain, but the future of TokenMarket within the industry.
Interview Series – Mikko Ohtamaa, CTO at TokenMarket
TokenMarket
Founded in 2017, TokenMarket is a crowdfunding platform based out of Gibraltar. Their efforts are focused on the development of the digital securities sector, through the use of blockchain technologies. To date, TokenMarket has assisted various companies’ complete successful token sales. This includes Storj, Ethos, and more.
CEO, Ransu Salovaara, currently oversees company operations.
PayRue
Operating out of London, England, PayRue is a tech company which offers services surrounding cryptocurrencies. This includes a mobile payment app, along with the acquired capabilities discussed here today.
CEO, Mikael Olofsson, currently oversees company operations.
In Other News
To date, we have detailed developments pertaining to TokenMarket on various occasions. The following articles elaborate on a few of their developments from the past year.
TokenMarket Gains FCA Approval, While Partnering with CMS equIP
TokenMarket to Host Security Token Offering
